In all shapes and colors: Varieties of contract farming

Marc Bellemare, Sunghun Lim

Research output: Contribution to journalArticle

11 Scopus citations

Abstract

Contract farming, wherein a processor contracts out the production of an agricultural commodity to a grower, is the first step toward more vertically coordinated-and thus more modern-agricultural value chains. As such, in principle contract farming is a necessary condition for the structural transformation of developing economies to occur. Yet contract farming is far from monolithic, and the institution takes on a variety of forms. In this article, we describe how the institution of contract farming varies in cross-sectional data covering 1,200 households across six regions of Madagascar, half of which are growers in contract farming agreements covering a dozen different crops. In this setting, participation in contract farming has been associated with increases in income, improvements in food security, and reductions in income variability. Given those presumed effects in this setting of participation in contract farming, we then look at the correlates in our data of participation in contract farming. as well as one's willingness to pay to participate in contract farming as a grower in an attempt to better target policies aimed at encouraging participation in contract farming.

Original languageEnglish (US)
Pages (from-to)379-401
Number of pages23
JournalApplied Economic Perspectives and Policy
Volume40
Issue number3
DOIs
StatePublished - Jan 1 2018

Keywords

  • Agricultural value chains
  • Contract farming
  • Grower-processor contracts
  • Outgrower schemes

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